Income Tax

If you are employed in Spain, and your employer deducts tax, and you earn less than €23,000 you do not need to submit a tax declaration. Some lawyers and asesorias tell retired ex-pats, who receive pensions that they too do not need to submit a declaration, this is incorrect and you should always check this out first.

In Spain, the tax year is the same as the calendar year (January to December). Tax is due to be declared the year after. Preparation of your tax return, should you need to submit one is done in May and early June, by a qualified accountant. The tax form is known as Modelo 100.

The tax can be paid in two instalments, the first of 60% has to be paid by about 25th June (that was the date for 2007 tax returns payable this year). The other 40% is collected by Bank direct debit on or about 5th November.

If you own a second property, whether for personal or rental use, the income received and the wealth tax payments are included on your main tax return. You do not need to complete modelo 214 (non-residents wealth tax return ) for the second property.

Personal alowances are given against your taxable income, but they do not automatically give full allowance to both husband and wife. The accountant will work out the most favourable way of submitting the return, ensuring that it fully complies with the Hacienda's rules for tax submissions in the relevant tax year.

People will often say, my accountant did it this way, or that way. The accountant I use is fully qualified and does an excellent job for my clients. In fact, this year, I was approached by a client who had already paid another "accountant" to do the tax declaration , but was not happy about the way some of his income had been treated. My accountant, re-worked the figures and saved him €500, which is quite a big saving.

People often ask why they have to pay more tax here than in the UK and why they cannot choose where they pay their tax. The simple answer is that you have to abide by the tax laws in the country you live.